Readers of this space know that the investment bias is toward large-cap companies who have a competitive advantage in established markets, preferably with a favorable global trend as a support. With this in mind, Goodrich Corp. is worth a review.
Goodrich Corp. (NYSE: GR), formerly a tire maker (the company without the blimp), is now an aerospace services company, providing both parts and service for engines, airframes, electronic systems, and other aircraft systems.
Analysts see double-digit revenue growth for GR in 2008 and 2009, aided by favorable sector trends, including strong international, cyclical demand for jets and increased jet use, and an aging jet fleet in the U.S.
Further, GR is also using strong cash flow to expand maintenance, repair and overhaul facilities.
Goodrich (NYSE: GR), a supplier of components, systems and services to the commercial and general aviation airplane markets, is recently up $1.14 to $68.20 on unconfirmed takeover chatter. GR has market of $8.4 billion with long term debt of $1.7 billion. GR October 70 calls have traded 41 times on transaction volume of 884 contracts above its open interest of 449 contracts. GR October option implied volatility of 29 is above its 26-week average of 25 according to Track Data, suggesting larger price risk.
YRC Worldwide (NASDAQ: YRCW), a transportation holding company with brands including Yellow Transportation, Roadway, Reimer Express, Meridian IQ, New Penn, USF Holland and USF Reddaway, is recently up $0.45 to $28.25 on unconfirmed chatter Deutsche Post has made a $41 bid for YRCW. YRCW has a market cap of $1.5 billion with $903 million in long-term debt. YRCW call option volume of 5,697 contracts compares to put volume of 319 contracts. YRCW October option implied volatility of 45 is above its 26-week average of 34 according to Track Data, suggesting larger price risks.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
WuXi Pharmatech (NYSE: WX) was started with a Hold rating and $29 target at Jefferies on valuation. JP Morgan started shares with a Neutral rating and Credit Suisse initiated shares with an Outperform rating.
Myriad Genetics Inc (NASDAQ: MYGN) was started with a Hold rating and $50 target at Citigroup, as the firm is cautious on the Phase III Flurizan results and does not recommend putting new money here at these levels.
Citigroup also initiated shares of Cypress Biosciences Inc (NASDAQ: CYPB) with a Buy rating and $22 target as the firm believes Milnacipran has sufficient database for approval and is capable of gaining meaningful market share as firstline therapy.
Knology Inc (NASDAQ: KNOL) was initiated with a Buy rating and $25 target at BWS Financial, as the firm believes the company's growth potential is greater than other cable companies through a business plan that allows it to have operations in all regions of the U.S.
MOST NOTEWORTHY: The U.S. food industry, Mylan Labs, Amerigroup and Isle of Capri were today's noteworthy upgrades:
BMO Capital upgraded the U.S. food industry sector to Outperform from Market Perform to reflect the group's defensive nature, the recent valuation contraction, and predictable earnings growth. General Mills (NYSE: GIS) is the firm's top pick in packaged food, and they raised Kellogg Company's (NYSE: K) target to $59 and Kraft Foods' (NYSE: KFT) to $36.
Credit Suisse upgraded Mylan Laboratories (NYSE: MYL) to Outperform Underperform, as the firm believes investors are "too negative" on the Merck transaction. The firm said the company is well-positioned long-term to be a leader in the global generics industry.
Credit Suisse also upgraded shares of Amerigroup Corporation (NYSE: AGP) to Outperform from Underperform, as they believe the company is poised for better than expected margin improvement in 2007 and 2008.
Isle of Capri Casinos Inc's (NASDAQ: ISLE) rating was upped to Buy from Hold at Morgan Joseph, citing indications of progress in the company's turnaround.
OTHER UPGRADES:
Epic Bancorp (NASDAQ: EPIK) was upgraded to Buy from Hold at Sandler.
Aruba Networks Inc (NASDAQ: ARUN) was upgraded to Outperform from Sector Perform at Pacific Crest.
"There are several ways to play the airline industry without buying the airlines themselves." explains Benjamin Shepard, a research editor for Personal Finance. Here, he looks seven stocks that are poised to profit as the sector "gets its wings again."
Hexcel Corp. (NYSE: HXL), he notes, is the largest producer of woven carbon-fiber sheets, which are extremely important for both Boeing's new 787 Dreamliner, as well as for the new Airbus A380. He rates thes tock a buy up to 25.
Aircastle (NYSE: AYR) and Genesis Lease (NYSE: GLS) are both aircraft leasing companies and publicly traded partnerships, and both are holdings in the Personal Finance model portfolio. He notes, "As airlines continue their recovery and passenger volume rises, older planes must be replaced and new planes added to the fleets."
Both partnerships, he notes, are based in Ireland and lease to both passenger airlines and cargo companies around the world. He says, ""Aircastle and Genesis are excellent bets on the continued growth of air travel and pay dividends of around 6% and 8%, respectively."
MOST NOTEWORTHY: JDSU (JDSU), MasterCard (MA), GlobalSanta Fe (GSF), Molson Coors (TAP) and TRW Inc (TRW) were today's notable upgrades:
BMO Capital upgraded JDSU (NASDAQ: JDSU) to Market Perform from Underperform based on valuation and good industry fundamentals.
AG Edwards considers MasterCard (NYSE: MA) a defensive payments play, upgraded shares to Buy from Hold, and would use weakness to build positions in the stock.
GlobalSanta Fe (NYSE: GSF) was upgraded at Bernstein to Market Perform from Underperform based on the merger with Transocean (RIG).
Molson Coors (NYSE: TAP) was upgraded to Buy from Neutral at Goldman based on valuation and potential increased free cash flow in 2008.
TRW Inc (NYSE: TRW) was upgraded to Buy from Sell at Goldman...
OTHER UPGRADES:
Thomas Weisel raised Network Appliance (NASDAQ: NTAP) to Overweight from Market Weight.
MOST NOTEWORTHY: Merck (MRK), McMoRan Exploration (MMR), TheStreet.com (TSCM), Goodrich Petroleum (GDP) and Coventry Health (CVH) were today's noteworthy upgrades:
Cowen is optimistic on Merck's (NYSE: MRK) business momentum, key products, and pipeline, and upgraded the pharmaceutical giant to Outperform from Neutral.
JP Morgan believes the recent discoveries have created a lower risk profile for McMoRan Exploration (NYSE: MMR), upgrading shares to Overweight from Neutral.
Needham upgraded shares of TheStreet.com (NASDAQ: TSCM) to Strong Buy from Buy on the Corsis acquisition as they believe the deal strengthens the company's advertising business.
Jefferies upgraded shares of Goodrich Petroleum (NYSE: GDP) to Buy from Underperform as they believe success at the James Lime development program will grow production and cash flow.
Banc of America upgraded Coventry Health (NYSE: CVH) to Neutral from Sell as they believe the company's three recent acquisitions will accelerate growth beginning next year...
OTHER UPGRADES:
WestLB upgraded Nokia (NYSE: NOK) to Buy from Add.
Bear Stearns upgraded Take-Two Interactive Software (NASDAQ: TTWO) to Peer Perform from Underperform and Electronic Arts (NASDAQ: ERTS) to Outperform from Peer Perform.
MOST NOTEWORTHY: Delta Air Lines, Inc (DAL), Goodrich Corp (GR), Opnext, Inc (OPXT), Terex Corp (TEX) and Aruba Networks (ARUN) topped today's most noteworthy initiations list:
UBS started shares of Delta Air Lines Inc (NYSE: DAL) with a Reduce rating and $17 target on valuation and management's overly optimistic outlook.
Deutsche Bank prefers to wait of a better entry point for Goodrich Corp (NYSE: GR) and initiated shares with a Hold rating.
Opnext Inc (NASDAQ: OPXT) was initiated at JP Morgan with a Neutral rating citing concerns regarding new transceiver margins.
Prudential believes Terex Corp (NYSE: TEX) is well positioned to take advantage of strong sustainable growth in the global infrastructure and mining markets over at least the rest of the decade, starting shares with an Overweight rating.
RBC Capital started Aruba Networks (NASDAQ: ARUN) with a Sector Perform rating while Lehman Bros initiated Aruba with an Overweight rating.
Goodrich profits increased on a jump in sales of aircraft equipment to Boeing and Airbus. The company said margin expansion associated with sales growth and improved operating efficiencies are primary reasons for a continued positive outlook.
International Paper Company (NYSE: IP) 47c vs. 35c
The company's profits rose on a gain from the sale of its U.S. forestlands and a strong operating profit from its industrial packaging unit. IP is transforming operations to focus on its global uncoated papers and packaging business.
Starwood Hotels & Resorts Worldwide (NYSE: HOT) 92c vs. 73c
Higher room rates helped to contribute to a strong quarter for the parent of hotel chains including St. Regis, Westin and Sheraton. The company has been enjoying strong travel demand and limited growth in supply. It has also been selling hotels and retaining management contracts to free up cash.
The video game publisher had a 38% drop in quarterly profit but beat Wall Street targets, overcoming investor anxiety that holiday shortages of new video game consoles would hurt sales. Shares rose 6% on the news. Company CFO Warren Jenson said EA was entering a growth period.
Starbucks Corp (NASDAQ: SBUX), today's most notable upgrade, was raised to Overweight from Neutral by JP Morgan citing valuation.
OTHER UPGRADES:
Deutsche Bank upgraded shares of Goodrich Corp (NYSE: GR) to Hold from Sell, also citing valuation, with a $48 target.
Sun Trust Robinson Humphrey upgraded Universal Tech Institute Inc (NYSE: UTI) to Neutral from Reduce; the firm believes any further deterioration in business conditions is limited.
Con-way Inc (NYSE: CNW) was upgraded to Outperform by Morgan Keegan and Raymond James and to Neutral from Sell at Merrill Lynch, following the company's fourth-quarter report.
Morgan Stanley upgraded Alcoa Inc (NYSE: AA) to Overweight from Equal Weight with a $40 target.
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MOST NOTEWORTHY: HSBC Holdings, WPP Group and Aware were today's noteworthy downgrades:
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